Companies & Industries

Why 'Forced' Job Rankings Don't Work

Managers shouldn't have to use arbitrary evaluation systems that pit employees against each other

Ten million years ago, when Ronald Reagan was President, and gigantic reptiles ruled the earth, I was a young HR person in training. During those days, I went to countless management-training seminars, and heard this mantra over and over: "Management is comprised of four activities. The four activities of Management are planning, forecasting, budgeting, and controlling." Don't laugh! This was solemn wisdom, back in the eighties.

Over the years, we stopped talking about management, and started talking about leadership. There was no more emphasis on forecasting, budgeting, and so on (all of which, if you think about it, are activities that can easily be done by non-management folks), replaced by talk of leadership topics like creating a vision, inspiring greatness, and motivating teams. I couldn't have been happier to live through the management-to-leadership transition, as I'd been more interested in the "people" side of management than the budgeting/forecasting stuff, which put me right to sleep.

After a dozen or so years of reading every leadership book I could get my hands on, from The One Minute Manager to The Leadership Challenge to Good to Great and zillions of others, earning a master's degree in Communication Studies and attending more leadership training sessions than I care to remember, I thought I knew a thing or two about inspired leadership. Not only that, but my role heading HR for a growing company gave me some influence on the leadership practices in the company, and the ways by which new leaders were trained. At my boss's urging, I launched a local networking group for HR leaders in our city (Chicago), and began to share best practices with my peers.

An Anti-Teamwork System

Now, imagine my shock when HR leader after HR leader told me that his or her company had adopted a forced ranking system as part of its performance-management framework, and shared the details of how their companies deployed the forced ranking technique (see BusinessWeek.com, 01/17/07, "Dealing with Performance-Review Anxiety"). If you're not familiar with it, forced ranking is a scheme that companies use to compare their employees to one another, by ranking one person in the department as best, another person as second best, and so on.

Everyone gets a place in the ranking: some poor soul, of course, is last, someone else is second to last, and so on. Some companies lop off the bottom 10%; most companies who use forced ranking attach pay increases to an employee's place on the list.

I was incredulous. "You talk about teamwork, a winning culture, and everyone pulling together, but when it matters most you turn abruptly to the philosophy of every man for himself?" I asked. "How can you credibly preach `the whole is greater than the sum of its parts' when, once a year, the whole team is elbowing one another for the top spots on the list?"

Employees Are Individuals

Also, this approach made no sense to me because all my leadership training had taught me that people are complex organisms, with unique skills and talents. How could you possibly say "You're best" or "You're worst"? Is there even be a single dimension ("Good workerliness?") by which employees can so easily be rated? One person is great at project planning but would collapse in a tense customer-facing situation. Another person, a lady nearing retirement, performs only two tasks from her cube in the corner, but the company would be sunk without her. You get the idea.

Ranking people is not like organizing screwdrivers in your toolbox by size. Andre might be a good worker, but teamed with Rajeev, he becomes a great one. The leadership talent that inspired you to put Tiffany, Gretchen, and Thuy together on the product-launch team has made all of them stronger contributors and brought great benefits to the company. What the heck could be the benefit of ignoring these interdependencies, and lining your team up in a zero-sum game of "Who's Better Than Whom?"

I thought the idea of forced ranking systems was horrifying in the abstract. It was even worse when my schoolmate Susan came back to class after a break one day and said, "Listen to this. I just got a voicemail from my manager, congratulating me on being slotted into 17th place in our team of 42 employees." Hearing that made me literally sick to my stomach. How is that kind of a message useful performance feedback?

Look at the Larger Purpose

If you think about American leadership lore, you'll quickly see that we recognize the value of teams and promoting shared goals. People become greater than they were when they began the quest—whether it's in a World War II buddy movie, A League of Their Own, The Magnificent Seven, or any number of other "teamwork" films you could name. There are countless stories of how people become greater than they were before they began their quest by fitting their talents into the team's larger purpose.

These teamwork stories show us the skinny, wisecracking kid from Brooklyn; the grizzled, cynical veteran; the outsider; and the rest of the gang finding a way to work together and achieve tremendous things. How does forced ranking fit into that picture? It doesn't, quite frankly.

Good managers—and I trust that's the only kind of manager you're hiring and the only kind you hope to be—evaluate people on their own merits and abilities, asking and expecting each one to surmount obstacles and become a better contributor year over year.

Good managers also handle performance problems without benefit of a forced ranking system that compels them to identify their biggest loser and other bottom-of-the-pack players. They don't need forced mechanisms to promote excellence and dismiss poor performers, and they certainly don't need a corporate forced ranking process to stymie their efforts at building teamwork and collaboration every day of the year—no exceptions.

Liz Ryan is an expert on the new-millennium workplace and a former Fortune 500 HR executive.